Bombardier leaves door open for China to be CSeries launch operator

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Bombardier is confident it can soon secure a customer in China for CSeries and it has kept open the possibility that the aircraft's launch operator could be a Chinese carrier.

"Some of the discussions [with Chinese airlines] are quite mature, so I am confident that will translate into orders in the not too distant future but that said, these things are never done until they are done," says Bombardier Commercial Aircraft president Gary Scott.

Bombardier has already secured Lufthansa Group, Irish leasing firm Lease Corporation International (LCI) and US regional airline group Republic Holdings as launch customers for CSeries.

Scott says this means Europe and North America are covered, so now Bombardier is looking for a launch customer in China.

"That's the complement of launch customers that we want," he says.

Lufthansa Group, LCI and Republic may be launch customers but none have committed to being the launch operator.

Although Scott has kept open the possibility that a Chinese carrier may be the first to fly the CSeries.

"There's an opportunity there," he says, but adds a lot depends on whether the Chinese carrier needs the aircraft on the specific date that the first CSeries will be ready for delivery in 2013.

Bombardier's confidence in the China market comes despite the fact that the aircraft-maker has not sold a commercial jet aircraft in China since 2003. This is when it delivered two Bombardier CRJ700s to China's Shandong Airlines, its largest commercial customer in China and a CSeries sales prospect.

Scott attributes the regional aircraft-maker's sales record to China's tax regime.

"The number one issue is that China makes it difficult for established companies [overseas] to sell turboprops and regional jet aircraft there."

"Any aircraft under 25t has a high duty or value-added tax."

"China's taxing policy discourages the sale of small aircraft to China," he says.

The CSeries will be subject to a lower tax rate because it weighs more than 25t.

"We think the CSeries will do well in China," says Scott, adding that it is an "optimized product" and there are some segments of the China market where the CSeries is more suitable than regional aircraft or larger jets.

He also says China is a major focus for the company because Bombardier's forecast predicts that during the next 20 years, China will overtake Europe as the second largest market in the world for commercial aircraft.

"When you look at the market for commercial aircraft in the next 20 years. China is easily 20% of the global market," he says.

"China is the leading emerging market in the world," he adds.

Bombardier's commitment to China is evident by the fact it has a team of commercial aircraft sales people based in Beijing. These people are dedicated to serving the China market, whereas Bombardier's commercial aircraft sales for the rest of Asia are generally handled out of Canada.

But Scott says the Canadian aircraft-maker plans to have commercial aircraft sales people stationed in other parts of Asia starting later this year or next year.

"We are living in a global economy and it is hard to manage everything out of Toronto or Montreal," he says.

"It isn't just about sales and marketing" but rather the move is part of Bombardier's broader strategy "to grow our local roots and become local to the region".